Cloudy With A Chance For Tears In California
The Independent Journal reports from California. “Ian Minto isn’t exactly homeless, but he sure doesn’t have his home. The former banker lost his job and, last fall, began falling behind on mortgage payments on the Mill Valley house he grew up in. He tried to refinance but said the lender that held the second mortgage refused to sell the note. Despite having plenty of equity, he was unable to restructure his payments, which forced him to default on his loans. Foreclosure proceedings began.”
“Desperate, he sold the home - appraised at $1.2 million - for about $300,000 less than it was worth. He is now suing to get his house back. ‘(I felt) like I wanted to kill somebody or jump off the bridge,’ said Minto, who just took a job at Radio Shack to help.”
“Peter Richmond, a Pacific Union realty agent who worked as a lender for more than two decades and specializes in foreclosures, noted that ‘there’s a lot more of it now than a year or two ago.’”
“David Faudman, CEO of (a) Bay Area subscription-based real estate listings service said there is more activity than people realize. Taking into account confidential notes agents leave for one another on the MLS, Faudman said the percentage of distressed properties in Novato is nearly 14 percent of the 376 total listings there.”
“‘This year it’s more short-sale activity than we’ve seen in many years. The signs were there that it was coming. There was a lot creative financing with the lenders,’ Steve Dickason, managing broker at Pacific Union in Greenbrae.”
The Fresno Bee. “After months of cutting prices and offering increasingly generous incentives at its four Central Valley communities, with less-than-expected success, Pacific Union Homes decided to up the ante by offering new home buyers a week per year at a timeshare home.”
“‘For a builder, it’s not going to make up for an overpriced house,’ added Robin Kane, a real estate market analyst in Fresno. ‘All things being equal, these offers should not be anything more than icing on the cake.’”
“‘We’ve been screaming price cuts for the last six months,’ said Robert Stankus, a marketing consultant for Pacific Union.”
“Pacific Union’s offer was accompanied by some ‘pretty steep’ price cuts, Stankus said. In the past year, the builder has slashed prices in its new Central Valley subdivisions by $70,000 to $125,000.”
The LA Times. “There’s no quicker way to get a handle on the softness in the local new-home market than to flip through the home-builder ads in the weekend paper.”
“‘Huge Inventory Reduction Sale — Up to $200,000 Off’ was one ad for houses by Century Vintage Homes in Riverside and San Bernardino counties that caught my eye. At a golf course community in Desert Hot Springs, homes were being marked down from $565,000 to $365,000.”
“But the fact is that all this builder price slashing isn’t doing much to juice sales. Indeed, the price reductions may be stoking fear instead of interest, concludes Daniel Oppenheim, a building-sector analyst with Banc of America Securities.”
“‘Agents noted price declines in every market surveyed. However, agents said that lower prices failed to attract buyers because potential buyers focus on the risk that prices will fall further rather than perceived bargains.’”
The Orange County Register. “Market watcher Steve Thomas…in Aliso Viejo has a new stat out: foreclosures and short sales listed for sale — what I’m calling distressed properties — as a share of total for-sale inventory by major O.C. communities. Short sales are where the bank agrees with a troubled borrower to take less than the loan amount due at sale.”
“The report (derived from MLS listings) shows that as of last Thursday, Santa Ana’s home inventory had the highest share of distressed properties in O.C. at 32.8%, just ahead of Anaheim at 32.6%.”
The Union Tribune. “By any standard, even after a year of decline, San Diego’s home prices are still out of whack. Look at the distance between our median income and the median price of a home.”
“To qualify for the Realtors’ median of $614,000, the borrower would need to make about $138,000, San Diego mortgage broker Greg Brooks said.”
“‘And that’s an absolute minimum, assuming that the borrowers had no other debt, had $61,000 for a down payment and could afford to spend 40 percent of their income on mortgage payments, which is the absolute maximum recommended,’ Brooks said.”
“Look around and try to figure out how many people you know who would qualify for that loan and you’ll get an idea of why demand for San Diego housing is going to be soft as long as prices remain where they are.”
“‘Everyone’s talking about the real estate market coming back in 2009,’ said Robert Simpson, CEO of Investors Mortgage Asset Recovery Co. in Irvine. ‘We’re not coming back anywhere near 2009. It took about five years for this market to build up, and it’ll take five years to come down. Properties are going to slide back to neighborhood income, so people will be able to afford them. It has always been thus.’”
The Desert Sun. “Home sellers should get out of the market unless they are really serious about selling and not just testing the waters. And this is probably the best time for buyers to find exactly what they want.”
“That’s the advice of Greg Berkemer, executive VP of the California Desert Association of Realtors, who noted that the number of unsold homes and condos in the Coachella Valley grew to about 9,170 in October, up 571 units in a month and 1,094 more than a year ago.”
“Berkemer said home sales are down in eight Coachella Valley cities with only Indian Wells showing a gain. Sale prices are down in seven cities.”
“Recognizing the bottom will be ‘more about hindsight than foresight. The bottom is not a pinpoint on a graph. It is more like a wide bumpy trough. It appears that is where we are right now,’ said Berkemer.”
The Daily Bulletin. “Alan Long says you might just have to get by ‘riding a smile and a shoeshine’ as Arthur Miller wrote in his classic play ‘Death of a Salesman.’”
“But Long, president of the Southern California Region of Sotheby’s International Realty Inc., remains optimistic. ‘You can say the market is bad, but people still want to buy. They still have confidence in our product,’ he said.”
“That might be true. The numbers suggest a big dose of caution should accompany that confidence.”
“Leslie Appleton-Young, chief economist at the California Association of Realtors, expects things to be tough this year and next. Inventory is building, but Appleton-Young said this can be easily fixed. ‘Our industry can control this by not taking listings from unrealistic sellers.’”
“So what’s coming? ‘It’s a pretty difficult environment now to come up with a forecast that’s right on,’ Appleton-Young said.”
“Maybe. But here’s mine. Our future, residential real estate wise, is cloudy with a chance for tears.”
Ben, just so you know, it’s the “Marin Independent Journal”, not “Independent Journal”. In case it matters to you.
It’s understandable how the little guy can skew up. But from the last few weeks, I am shocked that the big wits in wall street, the so-called masters of the univ, the guys who deal with money daily, can still skew up royally. It makes the little guy’s mistakes forgivable.
The mania was systemic.. a “revolution” of lemmings (i researched it) jumping off a cliff into an ocean of what appeared to be easy money..
“The Independent Journal reports from California. “Ian Minto isn’t exactly homeless, but he sure doesn’t have his home. The former banker lost his job and, last fall, began falling behind on mortgage payments on the Mill Valley house he grew up in.”
Mortgage payments on the house he grew up in ???
1.2mil didn’t cover the mortgage for a house purchased by his parents when he was a kid - sounds like another House-ATM conversion went bad
Not to worry, with his new job at Radio Shack he’ll be able to pay it all off.
“Desperate, he sold the home - appraised at $1.2 million - for about $300,000 less than it was worth.”
*******
This statement makes no sense.
A house is “worth” what someone will pay for it.
C’mon MSM - let’s get your act together!
Instant Equity!!
“Desperate, he sold the home - appraised at $1.2 million - for about $300,000 less than it was worth.”
Shoot. If I move to Tucson, $300,000 is well above the amount I would put into a house there. I’ll bet that guy has a net worth (outside real estate) of $50,000. Most FBs are like that.
Where is the personal finance class that says the quickest way to financial independence is real estate?
“Shoot. If I move to Tucson, $300,000 is well above the amount I would put into a house there.”
—
Not Exactly Music to the Ears of the local FBs…
I’ve been tracking Tucson for months now, and some of the holdouts are slooooowly seeing the light.
[ in the area that I monitor I see 25 stubborn FBs asking $200+/sqFt this month vs. 32 a month ago, and fresh (new) MLS smell for every rotten 6mnth-1Yr+ old listing]
I too am very sick or the “what it’s worth” bullshit. Lemme see 1.2 mill (300k) = 900k. Guess the pos wasn’t worth 900k to a moron loser selling battery chargers at radio shack.
What are the odds that this loser walked with any money after the sale? LITTLE TO NONE is my bet! The best this Bozo has (wayyyyy to much if you ask me) is the big tv, jet ski and SUV he squandered his parents lifelong bequest on. Yup, his parents worked till death so their loser ignorant son could live like FIFY CENT for 3 years!!!
Sry for the rant, but is just worked all day to find sob story about this asshole touted in the paper. I hope he got the clap from one of the hookers he spent his parents bequest on!!!
No kidding. The article also stated that he had “plenty of equity.” Apparently, not equity enough to not sell it at a loss.
“About $300,000 less than what it’s WORTH….” Would that be worth to an appraiser, or worth to the buying public? Because what the market will pay is a much more accurate figure.
Why would he want his house back? He couldn’t handle owning it the first time around.
This story just makes no sense. He wanted to restructure a loan on a house he grew up in? To what? One that doesn’t require a payment? How is he supposed to qualify for a loan without a job? Assuming the house has the same mortgage as it did when he was a kid, which we all know is not likely, then what is there to refinance? Obviously, he did use the ATM house model at some point.
And what was he trying to do anyway; pull perceived equity out of the house so he could use it to pay the mortgage? This story has more holes that swiss cheese.
He ATM’d himself out of an inheritance, for sure.
The “MSM” glossed over the fact that he had a second mortgage. When you take a second mortgage, it should be pretty obvious that you’re RISKING YOUR HOUSE if you can’t pay it. I’m not sure what this guy wants. It’s too bad he lost his home, but:
1. He’s not a kid just starting out. Why doesn’t he have any savings to cover his mortgage for a year or so if he loses his job.
2. He had a SECOND MORTGAGE.
It’s hardly some hard working guy, who paid his mortgage on time for 29 years and then got sick or hit by a drunk driver, or got cancer, etc.
Plus, he was a BANKER!
“And what was he trying to do anyway; pull perceived equity out of the house so he could use it to pay the mortgage? This story has more holes that swiss cheese.”
Mom-n-Dad plus three kids. Parents expire, and the estate (paid-off house) is appraised at current value. One sibling wants the house, so the two others must be paid their thirds. The only way around this current value gig is if one sibling is a “special needs” case. In that case, the taxes remain the same as the parents paid, and the two others have to sign-off. Once the “special needs” sibling expires, the other two must appraise at current value, etc., and sell. Paying off the siblings often means another mortgage!
You KNOW they wont print this:
What is it with these CLUELESS little chicky poo reporters? Did jennifer even graduate from College? I doubt it…because if this is what they teach in college SHE GOT RIPPED OFF, and should sue her college for the tuition back.
Very poor reporting, no questioning of how did this guy have a second mortgage…nothing….
Lisa (here at the HBB) likes to talk about the Debt Zombies in Marin.
Ian Minto is an example of such a person.
Owwooo Debt Zombies of Marin
You better stay away from him
He’ll rip your lungs out Jim
Huh, I’d like to meet his tailor…
I saw a Debt Zombie with a foreclosure notice in his hand
Walking through Sausalito in the rain…
I saw a Debt Zombie walking through the streets of Marin, in the rain…
His hair was Perfect!
Little old lady got mutilated late last night
Werewolves of London again
Werewolves of London
“Lisa (here at the HBB) likes to talk about the Debt Zombies in Marin.”
Yes, I do! I live amongst them, unfortunately -); And I can report that I’m seeing all sorts of bad behavior and sullen looks here in oh-so-special Marin County.
Let me know when y’all decide to sell the county building. It’s the one house in Marin I’d put a full price offer on >; )
There is sooooo much more to that story. The note-holder on the second didn’t want to sell? WTF? When you refinance, the second either gets paid off or subordinated. In the first case, the lender has no say. You just pay the mofo off. Even if there’s a pre-pey, all it means is that your pay-off will be a lot higher than the principle balance (definately a royal reaming, but it doesn’t keep you from refi-ing). In the second case, there are times when the borrower just wants to refinance the first and leave the second alone. In that case, the holder of the second note has to agree to subordinate. They can refuse to do so and the whole deal can go soar from there. But no where in the process do I see the need for a note to be sold. I smell some BS in this story. Not adding up at all.
In all fairness, the family home usually goes to the children. He might have bought from his siblings near the top of the market and then renovated.
“Mortgage payments on the house he grew up in ??? 1.2mil didn’t cover the mortgage for a house purchased by his parents when he was a kid - sounds like another House-ATM conversion went bad.”
Nothing like jumping to conclusions. Perhaps he took a mortgage to buy out siblings who were co-inheritors.
My apologies, Jay. I didn’t read the entire thread before I responded.
If that’s the case, then why aren’t his siblings helping him keep the house? Kinda mean to run with the $$ while your bro goes BK.
Why? If that is the case he had a choice, he didn’t have to buy out his siblings. He could have just cashed out with the rest of them. I doubt he would have shared the profits if the appreciation gravy train had kept rolling along.
Mortgage payments on the house he grew up in ???
You caught the joke! The truth is that he never grew up.
I don’t see anything here I couldn’t have helped him with if he only asked. Some sellers are just bone heads, dense, space cases.
Actually, I hate how all of the FB stories seem to involve people who either lost their jobs or had health problems. The truth is, people in these situations have often tended to lose their houses once the money ran out, even pre-bubble bursting. I don’t feel like heaping too much abuse on these people- the focus should be on all of the FB who lose their homes despite staying in their job and remaining healthy. Those are the ones who milked the HELOC cow until it died (or bought twice the house they could afford, on some bizarre teaser rate scheme). Hey, MSM- I want to hear about FB who unequivocably earned their Joshua Tree treatment!
What a total disaster. I think what’s becoming ever more clear is that the true nature of California housing prices has finally gone from being the adornments of the seemingly rich and affluent to simply overrated garbage. How would anyone in their right mind at this moment even be considering a home anywhere in this state?
What was obvious to us 3 years ago is now painfully obvious to the general public.
I still think it’s only obvious to a small part of the public. Getting better every day however!
“LAY: …cloudy with a chance for tears.”
A small but highly influential part of the public seems to get the picture now.
Everyone seems to acknowledge the bubble - except in their state, county, neighborhood. Jeebus has not come to them yet and wapped them upside the head with the great 20 lb. of wisdom.
Lt. Dan: “Have you found Jesus yet, Gump?”
Forrest Gump: “I didn’t know I was supposed to be lookin’ for him, sir.”
I love the south Bay of LA. Hawaii may be the state with a better climate (52 weeks out of the year) but LA has a great climate 50 weeks out of the year and J-O-B-S. If you overlook the pretense you are in a great place. I will return there someday. Umm…45 degrees high here in Maryland by Friday. Grr!
I think what’s becoming ever more clear is that the true nature of California housing prices has finally gone from being the adornments of the seemingly rich and affluent to simply overrated garbage.
“Living in the Limelight, the universal dream
For those who wish to seem…”
“Limelight” lyrics by Neil Peart of Rush.
Describes Venice Beach attention-getters to a “t”, but that does not dissuade me from missing LA. There are some real people there. You just have to break the ice and tell them to stop the bull$hit.
The words to the songs “Limelight,” “Tom Sawyer,” “Working Man,” and “Anthem” ring well to this individualist.
“love the south Bay of LA. Hawaii may be the state with a better climate (52 weeks out of the year) but LA has a great climate 50 weeks out of the year”
Not so enthralled as you are on the South bay though it is a rich source of jobs. Problems in the south bay include bad traffic,lack of green open greenbelts and too few parks: beaches overrated and hard to get to unless you live 3 blocks or less from the beach. If you can afford to drop 1 million + for an old weathered beat up /remoded 2/1 or 2/2 condo 2 blocks from the beach in Hermosa or Manhatten beach then yeah, you have it made. Other wise the rest of the south bay is what i call heavily traffic-impacted , with over- crowded dull cookie cutter suburban tracts(torrance, redondo beach) or declining older sometimes gang-ridden pit zones a few miles away from the tiny coastal slivers (Harbor city,hawthorne, gardena,lawndale, east TORRANCE, wilmington).
BTW i love Rush-my all time favorite rock group along with with Genesis! My fav lyric ,’distant early warning’.
“So what’s coming? ‘It’s a pretty difficult environment now to come up with a forecast that’s right on,’ Appleton-Young said.”
Anyone have a link to LAY’s quote about how real estate prices in Marin County wouldn’t go down until she was dead, or something like that?
I want to savor, to compare and contrast.
Sure.
http://tinyurl.com/353nrc
Thanks I love that one.
Pure arrogance.
“It’s God’s country, what can I say,” Leslie Appleton-Young, chief economist for the California Association of Realtors, told an audience of agents Tuesday in Terra Linda. “When is the 30 percent decline in Marin County’s market going to happen? Not in my lifetime.”
I’m bettign by next christmas, she’ll be eating those words. (Or a suicide statistic.)
U2, “In God’s Country” ….
Desert sky
Dream beneath a desert sky
The rivers run but soon run dry
We need new dreams tonight
Desert rose
Dreamed I saw a desert rose
Dress torn in ribbons and in bows
Like a siren she calls to me
Sleep comes like a drug
In God’s Country
Sad eyes, crooked crosses
In God’s Country
““‘It’s God’s country, what can I say,’ (said) Leslie Appleton-Young, chief economist for the California Association of Realtors. ‘When is the 30 percent decline in Marin County’s market going to happen? Not in my lifetime.’””
http://thehousingbubbleblog.com/?m=20070411
Hello,
Please note L.A Y. past deeds (juicy).
She also spent several years working as a research associate at the Federal Reserve Bank of Philadelphia and as an instructor at the University of Pennsylvania.
I just adore the FED minions…don’t you?
Someone asked yesterday about the 90s bubble burst. I’d like to add my own anecdotal to the record.
We purchased a 4+3 in Palmdale in April of ‘91. The same floorplan sold for a high of 175K the previous spring. We purchsed for 132K and felt we’d gotten, “a deal”. 25% off of the high, what a bargin!
Well, the house proceeded to continue to fall in value until we saw an exact matching floorplan sell one street over for 93K in 1995. Our “equity haircut” had been 28%. During the interim I’d been laid off due to the peace dividend recession. Those were some very tough years.
We sold that house to a fry cook from Van Nuys in late ‘04 for 320K, I calculated an overall gain once cost were factored in over the 13 1/2 years to be 58K, or 4.5K/year. That didn’t include free rent.
I expect to be buying a better house in a better neighborhood for less than half what I sold mine for and I’ll be a cash buyer at that point.
BTW, NODs in 93552 set a new record of 124 and counting for October against a total of 18 resale closings. 3 month and 12 month trends continue to march skyward. Luckily, tree can’t grow to the sky. Once every house has been foreclosed on in the zip code I assume the rate would of necessity start to drop.
I remember the days of 95k for for somewhat large properties in Palmdale. That wasn’t a pretty time…
Yep, what I could add was that it was easy to find 4+3 SFRs for 400-500/month in Palmdale those days. Rents will decline going forward more than most people imagine due to the glut of vacant inventory.
But Palmdale isn’t a pretty place, so the symmetry is perfect!
There’s an apartment in my building for sale so I took a look at its sales history. Sold for $380k in ‘91, sold for $300k in ‘95, now on sale for $980k. That was a 20%+ decline over five years, but of course the realtor selling this thinks that $980k is a good deal because prices only go up here.
This is in San Francisco. Sorry, forgot to add that in the original post.
Please….prices never go down in San Francisco.
Bwahahahahahaha! All aboard the pain train!
“We sold that house to a fry cook from Van Nuys in late ‘04 for 320K”
Pretty much sums up the problem of this bubble…
Last I heard he had approximately 13 people with 5 cars living in the SFR. He might not get foreclosed on if he can keep his vacancy rate low…..
Pretty much sums up the economy and type of jobs being created, too.
I will add mine too since it took place in Hermosa Beach, where many kool-aid drinkers claim it will never happen in the So Bay.
I was living in Hermosa Beach in 1994 (3 block from the strand). I learned about a small duplex in foreclosure. We (my family) contacted the bank’s realtor. We found out they were asking $250k for the 2 1-bedroom duplex. We countered at $215k and they accepted. I then checked the property history to see what it last sold for. In 1989 is sold at the peak for $600k! 4 yrs later it was an REO. Now the property is worth around $750k although that won’t last long (already down from about $825k peak).
Citigroup Fighting For Its Financial Life
From the article………….
Level 3 assets at Citigroup exceed shareholder equity. Now take a look at level 2 assets sitting at $939 billion dollars. A mere 10% haircut in the value of those assets would eat up 74% of working capital. A 10% haircut in Level 2 assets in conjunction with steeper losses in level 3 assets would make Citigroup insolvent.
http://www.minyanville.com/articles/index.php?a=14754
Perhaps I should dust off my Citicard and buy a house with it?
I know this is evil and could cost many good people their jobs. However, I can’t help but wish the downfall of Citigroup. This business has made zillions by nickel and diming everyone on the CCs, let alone whatever unethical, morally-corrupt, dubious, and flat-out criminal activities have gone undeterred. Like Enron, the higherups thought they were immune to the laws of finance and karma. Well, karma is…well, you know what is said about payback.
I hope these Citi and its multi-trillion dollar mega store go broke. What sweet irony!
OCDan, I couldn’t agree more with your post. I feel exactly the same way. Unfortunately, the higherups will take off with their golden parachutes, while the rank and file take it on the chin and are thrown under the bus, unemployed and unable to find new work easily. However, I do agree that the world would be much better off without Citi. They were leaders in changing the bankruptcy laws, as I understand it, with heavy lobbying activity.
So do I, but for all our sake I hope they go broke slowly.
Hi Combo,
Definitely not an original idea, yet a question I chased:
Why don’t we take every single major financial institution out there and then divide their total Level 3 assets by their equity capital base and make comparisons?
This will give us a better idea as to which of them may really remain solvent at the end of the day. Shall we?
Let’s have a look at Citigroup. Their equity base is $128 billion. Therefore, their Level 3 assets to equity ratio: 105%
How about Goldman Sachs? Level 3 assets are $72 billion, equity base is $39 billion. Their Level 3 assets to equity ratio is 185%.
Morgan Stanley: $88 billion in Level 3, equity base is $35 billion. Ratio: 251% (WOW!)
Bear Stearns: $20 billion in Level 3, equity base is $13 billion. Ratio: 154%
Lehman Brothers: $35 billion in Level 3, $22 billion in equity. Ratio: 159%
Merrill Lynch: $16 billion in Level 3, $42 billion in equity. Ratio: 38%
Here is the Level 3 assets to equity ratio summary:
Citigroup 105%
Goldman Sachs 185%
Morgan Stanley 251%
Bear Stearns 154%
Lehman Brothers 159%
Merrill Lynch 38%
Looks to me like Goldman Sachs and Morgan Stanley are by far in the WORST situation among the investment banks.
And yet the media is focusing all of their attention on Merrill Lynch—which actually has by far THE LEAST EXPOSURE of all of them. What a joke.
An original thought: I posed the question, and really smart people put the lead to paper. Thank you. I have a difficult time making sense of lies.
Credit: http://www.rgemonitor.com/blog/roubini/224871
A double thanks to all the really smart people here!
Best,
Leigh
P.S. coco is helping me type…grrr (lovely cat;)
P.S.
I ask dumb questions and smart people answer.
Thank heavens for dumb questions, and smart answers.
Thank You, my fellow bloggers.
Best,
Leigh
We have some alumnis from these distressed banks working for the Fed. Reserve don’t we?
“wish the downfall of Citigroup”
Be careful what you wish for. It is a large, but not huge, jump from Citi to USA, in terms of finances. If Citi folds, we will have Brazil/Argentina/Russia’s problems; which makes our current crises quite welcome. Capital flight & the resulting dead currency are not funny.
” know this is evil and could cost many good people their jobs. However, I can’t help but wish the downfall of Citigroup. This business has made zillions by nickel and diming everyone on the CCs”
Citicards gave me a very high loan limit but has been charging me 18 % even though i can borrow at 0 % on several cards and my average loan rate is 8-9% for all other bank loans i carry. I Cut their card up long time ago and just keep a small balance to maintain a low loan/balance ratio.
Citicards/citigroup are CC crooks, as was their bastard offspring the AT&T (?) universal card. Another crook is US Bank-same very high borrow limit but they also charge usury rates(16%) .
There is nothing evil about hoping the scumbags on Wall Street get what is coming to them.
What’s working capital represent on a bank’s B/S? On a corporate it’s C/A - C/L - but never heard the term used in bank analysis.
I think he means “regulatory” capital, not “working” capital.
Investment banks have nothing to worry about not with Helicopter Ben manning the printing presses, Citigroup chairman Robert Rubin, and one of their own Henry Paulson (ex chairman / CEO of Goldman Sachs) as Secretary of the Treasury.
The Union Tribune. “By any standard, even after a year of decline, San Diego’s home prices are still out of whack. Look at the distance between our median income and the median price of a home.”
“To qualify for the Realtors’ median of $614,000, the borrower would need to make about $138,000, San Diego mortgage broker Greg Brooks said.”
“‘And that’s an absolute minimum, assuming that the borrowers had no other debt, had $61,000 for a down payment and could afford to spend 40 percent of their income on mortgage payments, which is the absolute maximum recommended,’ Brooks said.”
Actually the old metric was no more than 28% of AGI on housing and 32% on ALL debts, including housing. 40% reflects peak-bubble thinking, not historical norms.
“Look around and try to figure out how many people you know who would qualify for that loan and you’ll get an idea of why demand for San Diego housing is going to be soft as long as prices remain where they are.”
“‘Everyone’s talking about the real estate market coming back in 2009,’ said Robert Simpson, CEO of Investors Mortgage Asset Recovery Co. in Irvine. ‘We’re not coming back anywhere near 2009. It took about five years for this market to build up, and it’ll take five years to come down. Properties are going to slide back to neighborhood income, so people will be able to afford them. It has always been thus.’”
Nothing like a professional vulture to come right out and say it like it is.
“assuming that the borrowers had no other debt”
After 14 years in the biz, I can pretty much tell you that you have a better chance at spotting Bigfoot than finding that borrower.
I have zero debt. Of course, I also drive a ten-year-old car [lovingly maintained by yours truly] and my dinner tonight was homemade lentil stew on rice.
I’m not saying they don’t exist, they’re just a rarity. In fact, I venture a guess that most occupy a spot on this blog.
I’d concur. When it comes time to buy, if two of us bump into each other at an open house, we’ll already know each other by face (assuming you attend any local blogger dinners).
Got popcorn?
Neil
I hear ya. I’m currently watching a couple of foreclosures, and I always got the sneaky suspicion that another HBBer is looking over my shoulder.
Not a nickel of debt here, and several years’ worth of savings in the bank. 401(k) fully funded every year. I bet I sleep 100x better at night than the average FB.
We just put a bid of $450k on a new 2700 sq. ft. house in Santa Clarita priced at $599k. The builder pretty much laughed at us and sent us on our way. Even my realtor said everyone is having a difficult time qualifying. Well, I guess we just need to take our cash down payment and 800+ credit score and wait it out! Nothing lost here!! I guess they still think they can find a “greater” fool with good credit and a down payment!
Make sure to go back in a year and offer 350K, and 250K the next. They’ll learn to love ya!
Watch out for the direct assessments that get added in on the tax bill…Mello-roos by another name…The builders in the SCV are notorious for doing that.
Still have that nice 2300 sq ft house with a pool-sized yard on a cul-de-sac for sale in Valencia :).
If your heart isn’t set on a new house…you might try some of the neighborhoods built in the last 2-4 years as many of the houses for sale are short/REO sales. Tesoro, Copperhill North, Alta Vista and Bridgeport (if you can live with pack-em and stack-em) come to mind.
Yeah, I am currently renting in the Bridgeport area. Great, safe area, but the house are really sh*t! And MASSIVELY over-priced to boot! Hell, the pud (Many things come to mind with the term!) I’m living in now would sell in the high $500’s and it is a POS!! There are many FB’s in my neighborhood who still have their houses on the market in the mid-600’s!! For a PUD!! These people are screwed! Heck, I don’t even like Southern California that much and the lengths people will go to own property here! I am more of an East coast person. I think the sun fried a lot of these people’s brains!! If it wasn’t for my government job, we’d definitely be on our way OUT!!
Ride my bike down the bike path past Bridgeport all the time. I’m right up the street in Northbridge. We moved here about 9 years ago but are looking to move and take the kids somewhere else. We probably missed the boat on selling the house by about 6 months. It’s come down very quickly and it’s hard to know what “market” value is because nothing is going pending. There are buyers (even if it’s a handful) in every market for a variety of reasons, so we’re hoping to stumble across one. If we don’t sell, hubby is going to spark up the business that did very well during the last real estate downturn.
The thing that always got me about Bridgeport is that there are no yards at all…front or back. I’ve never been in a “finished” one…only the models when one set had to be closed because of flooding from the pond…I mean lake.
Same here… except my truck has 201,000 miles and is 12 years olf. Wife’s car is 17 years old, 170,000 miles. Do I care? nope. they get us around. But I DO like not having car payments and doing my part in not participating in the great American debt machine.
If most people bought only when they actually needed something… we’d be in terrific shape. That goes for houses too.
And just think how much less expensive things would be.
Saved 62% of take home last month. Zero debt.
Good grief, people. You are gonna kill the ‘meriKan way of life with that attitude! Now go out and spend (translation: get into debt for tens of thousands) on junk you don’t need that will become worthless and broken in less than a year.
The irony is that we advocate not buying anything. Couple that with our 70% consumer-driven, debt-ridden economy and lack of manufacturing and trade deficit.
Oh, did I forget the declining dollar?
Homes. Homes, anyone? Homes for everyone at less than 100 grand! Coming to a town near you.
Hey, I’ll be different. Az_lender’s car is a 2007. I buy low-end Fords, which are well known to disintegrate at 100K miles. So I buy them pretty often. For cash. We’re still talking only a couple of hundred a month to amortize the principal. (I don’t borrow the money, of course.)
I rode my ‘91 Escort to 150K miles no problem. (probably because of the Mazda-born engine) Worked just great until my ex-gf got it T-boned.
I have no debt. I have saved lavishly since graduating from college in 1986. I could only find a minimum wage paying jobs. I got frustrated and started my own business with less than $2000 in 1986.Today I am a multi millionaire. No I do not own a house. I saved up for my retirement first. I can comfortably live on just the cash cd’s interest alone. Now when the market tanks I will buy for cash. Thank you bloggers you have educated me and most likely saved me thousands of $$$$.
We’re closing in on 200,000 on my husband’s 1996 subaru outback (I’m driving it though as he is a consultant driving hither and yon every day). Had to buy a new car for him in the spring (my 1999 accord up and died one day). Took him 4 hours at the dealership to pay them with cash - that’s a story for another day though.
His brother who insists on driving the biggest shiniest SUV around (despite 3 kids nearing college age and mortgage debt to his eyeballs) asked me why I liked my husband’s POS car so much.
I said ’cause it’s free…
You also aren’t showing up in any loan shark’s office - thus, the count of such borrowers still hovers around zero…
Bet you owe Uncle Sam some tax money around April15. That’s a DEBT.
By the way, I heard that Bigfoot is trying to unload a few of his own gators up in the PNW. (uh-oh….I think I just came up with a new idea for one of those “Messing With Bigfoot” commercials)
LOL! Thanks, you owe me a new monitor.
How’s that short sale coming…?
No word yet.
My wife and I just bought 2 ‘nearly new’ low milage used cars in anticipation of needing extra seating in the near term, and we’ll be ‘debt free’ by january. Bought one for cash, and financed the last 10k of the other, and our non-retirement, non-house downpayment, cash reserves will be back to over what we spent by then.
Decent used cars will be really cheap, just 6 to 9 months from now…
I’d wait it out, and buy then.
Figure on paying 1/3 to 1/2 of what they are worth now…
How so? Anticipated repos flooding the market?
Aladinsane
Funny you say that. Here on Capitol Hill in Washington DC, on my weekend walk saw several very nice (expensive) almost brand new cars for sale. 1 was a hummer. Not my style. My thought was why would someone sell a car after only a year ? $ trouble perhaps.
a hummer? gas at 3 bucks you dope.
For all the folks buying cars with cash: have you worked out the opportunity costs? In my case, max contribution to 401k, multiple IRA’s and four 529’s for my kids consume a big chunk of my DI, so most of my savings after expenses go to a money market emergency fund. If that means I have to tap into the HELOC at 6.5% fixed (tax-deductible) to get an $18k used car and pay it off in 36 months, at least I know I’m using short-term debt while maxing out my long-term investments.
That’s a fact…
Oh yeah? Well the borrowers must be back cuz so is Bigfoot!!
http://www.news.com.au/story/0,23599,22672024-2,00.html
LOL! Looks like he’s assuming the “Joshua tree position”. Could be from those gators he’s trying to unload (see post above)
“experts say it looks like a bear “with a severe case of mange”"
ROTFLMAO………I could go on all night with this quote.
PICK ME! PICK ME!
Zero debt save for “intra month” card debt I pay off in full (pocketing a 1.5% cash reward in the process). Even paid off my 45K 1.9% Toyota new car loan early as, even though I was earning 180 basis points risk free spread on it I couldn’t bear getting debt notices.
Oh yeah, I structure debt portfolios for a living. go figure.
For 45k, you should have bought a Lotus. (Toyota engine!)
http://lotuscars.com/
Wife wanted 7 seats and a hybrid so we got a 7 seat highlander hybrid with all the tech options. Thought it was going to get 2800 hybrid credit but, as i make too much :), got burned by AMT.
Anyway. its ALL mine. DEBT FREE. LOve this big chunk of metal. Seriously, Use the navigation system to cruise thru distressed neighborhoods in the East Bay.
Can you believe it’s almost 3x heavier than the Lotus?
Friend has a Lotus Elise. This year’s expenses I’ve hard about: $2000 for brake work. $800 for 4 tires.
Insurance was hit for $1500 a couple years ago when a rock was tossed through the tiny back window in the company parking lot. (Had to take the car apart to replace it, apparently.)
Every time I see it I’m amazed someone hasn’t picked it up and driven off with it in the back of a big pickup.
Hey I want an Elise so badly!! No making fun of them. I just was telling another guy who’s into Porsches how I was putting money into stocks instead of buying another car. Guess he understood, hehe.
Ex!!!!
Eye leaking laughter!
Bigfoot!
Let’s hunt! Have guns and ammo!
Hey, you can’t shoot Bigfoot. He’s cute!
Actually the old metric was no more than 28% of AGI on housing and 32% on ALL debts, including housing. 40% reflects peak-bubble thinking, not historical norms.
For the nation as a whole, yes. For California during the last 20-30 years, no. Companies like Golden West and Countrywide made their fortunes on such loans. This is why CA house prices have been 6x or 8x income for a looooong time. Many people can absolutely handle 40% DTI if they make it a priority.
The post 2003 bubble was all about interest-only and 80/20 loans, not a simple and *predictable* risk such as 40% DTI. My prediction is that CA house prices will fall by 30%-50% (inflation adjusted) but easily stick at 40% DTI near the coast.
California house prices have been 4-5x income exept during bubbles. Some guy came on here with a chart that he created using data from the US Census Bereau and the CAR. I think his name was like Jay D or something.
“It took about five years for this market to build up, and it’ll take five years to come down.”
Buildup started in 1996, started coming down in 2005. 2005 - 1996 = nine years, according to my fifth grade arithmetic.
You’re right, but maybe he’s not counting the first couple of years when the price rise was possibly not much more than general inflation. And maybe he’s not counting 2001 when there was a slight stumble. And maybe he’s not counting 2005 when sales volume began to decline. Voila, nine minus equal five. …?!?!?
I mean, nine minus four equals five.
“‘Agents noted price declines in every market surveyed. However, agents said that lower prices failed to attract buyers because potential buyers focus on the risk that prices will fall further rather than perceived bargains.’”
Chuckle. Either that or without toxic loans, not enough buyers qualify at today’s ratios of prices to incomes.
Munch munch munch.
Sales continue to slow. Inventory is really high for this time of year. And the bank’s are just now owning up to their “unrealized gains” being “unrealized losses.”
Got popcorn?
Neil
(deep breath…….hold…….exhale) Ahhhhhhh, doesn’t fear smell sweet?
I think they’re running from us and our army of Joshua trees.
Got popcorn?
Neil
“After months of cutting prices and offering increasingly generous incentives at its four Central Valley communities, with less-than-expected success, Pacific Union Homes decided to up the ante by offering new home buyers a week per year at a timeshare home.”
Psych 101 comes into play with this offering…
To the great unwashed public, it looks like a 2 for 1 home deal.
“Leslie Appleton-Young, chief economist at the California Association of Realtors, expects things to be tough this year and next. Inventory is building, but Appleton-Young said this can be easily fixed. ‘Our industry can control this by not taking listings from unrealistic sellers.’”
Ah, Les, you keep saying this.
Unrealistic sellers are as likely to stuck in the past as fearful of the present - the present being an unmeetable monthly payment and an excessive mortgage, combined with zero equity. They’ve got two option: try to sell at an ‘unrealistic price’ or lose the house to foreclosure.
Either way, it’ll show up on an MLS near you.
Actual quote was:
Inventory is building, but Appleton-Young said this can be easily fixed. ‘Our industry can control this with a few dozen more strategically-placed wildfires.’”
How about the antitrust wildfire that will burn AY’s a@#!
Ah, no, that’s not going to work, Ms. A-Y.
1. Some agent is always going to break ranks to take a listing, even if the price is too high (they always figure they can get the sellers to take a cut later).
2. There are other ways to market houses. Maybe this is the opportunity for those other business models need to get a foothold.
I’m surprised, really, that she would speak the words “our industry can control this by not taking listings…” Isn’t that Justice Department suit against the NAR still in the works?
Yep,sounds like price fixing to me .
Oh, today’s unrealistic sellers were yesterday’s intrepid buyers. How many of these very same folks fell for their realtor’s siren song about ever rising prices only a very short time ago? The NAR blows.
“The rationale goes something like this: There’s a finite supply of homes and plenty of pent-up demand from potential home buyers. That demand will put the brakes on the housing decline before it turns into a rout.”
The very idea of “pent-up demand” is an oxymoron. Unless the unsold inventory is exactly zero, the demand is exactly equal to the number of sales.
If we’re going to introduce “pent-up demand” (non-existent but possible demand), then we need to introduce “pent-up supply” (non-existent but possible supply) as well.
In the blow-dried world of realtor-speak, pent-up demand seems to mean pent-up desires. People deserve the house they desire, and mere financial concerns are such a boor.
Hah, I like that.. pent-up-supply. I’m actually going to use that in arguments, thanks!
Right. In fact the housing bubble was the result of the process of satiating all the pent-up demand, to the extent that no more demand remains.
There certainly is a finate supply of homes. Did you see the annualized numbers of new homes constructed in 2004-2007? It is so darn huge that I wonder where the hell we are going to get population to fill them.
This is the best explaination of realtard math I’ve seen in print lately
“I make a 110 and couldn’t even come close after taxes to buy the median.”
Sure you can.
Say you’re married with one kid. Out of 110k you’ll be paying 16k federal tax, 5k state tax, 7k social security/medicare. That leaves 82k or 6,800/month in your pocket. Monthly payment on a honest 6% fixed loan on $475,000 house with 20% down is $2300. You have to pay property tax (~$5k) but you get mortgage interest deduction (~$5k), they cancel out. Homeowners insurance is like $50 a month. You have over 4 grand a month left over.”
This is from the comments section
The best part was how the article said the median in SD was 620k, and this tool immediately gives the median a 145k haircut in order to try and make his point. Nothing like pricing in a 23% haircut when talking UP the market!
Is he assuming that that amount is the down payment? LOL.
After consulting with a mortgage am calculator it’s either an interest-only loan on a principal balance of $475K (P=$400; I = $2300) or he really does mean 20% DP on $475K which means a principal loan of $380K with P+I = $2300.
So he’s assuming the buyer has $140K to put down on the median of $614K or he’s discounted the price of the house, respectively.
Either way, he’s delusional.
You forgot to factor in the $900/mo Escalade payment, the wife’s $600/mo beemer payment, the $500/mo boat/seadoo payments, the $8000 in credit card payments and the daily starbucks deposit. Leaving them negative $500/mo.
I used to live in a pent-up-house, sold it though and it lost it’s pent-upness.
All you need to know about the psychology of a bubble buyer
Middle of hysteria: Intense interest
Post bubble partum: Couldn’t be less interested
Thus, price doesn’t matter 1 iota…
“‘Huge Inventory Reduction Sale — Up to $200,000 Off’ was one ad for houses by Century Vintage Homes in Riverside and San Bernardino counties that caught my eye. At a golf course community in Desert Hot Springs, homes were being marked down from $565,000 to $365,000.”
“But the fact is that all this builder price slashing isn’t doing much to juice sales. Indeed, the price reductions may be stoking fear instead of interest, concludes Daniel Oppenheim, a building-sector analyst with Banc of America Securities.”
Desert Hot Springs is a dump. Nothing there should be over $200k. So discounting homes 200k when they are overpriced by 400k is still not a friggin deal. Anyone buying a home for 565k in Desert Hot Springs needs to have their meds checked!
“So what’s coming? ‘It’s a pretty difficult environment now to come up with a forecast that’s right on,’ Appleton-Young said.”
The only way LAY could possibly redeem herself, is to concede that her forecasts, and every statement issued by NAR truth-makers in the past five years, have been catastrophically wrong. She should refer information-seekers to this site instead. Our track record, compared to her’s, speaks for itself.
I think we need to institute a special new category for Leslie Simpleton-Young — the Giant Sequoia Suppository (GSS).
We already reamed someone with “General Sherman” the other night, so you’ll have to find another specimen.
Gang-bang on the Avenue of the Giants?
‘(I felt) like I wanted to kill somebody or jump off the bridge,’ said Minto.
Real comforting thought, knowing that society will soon be awash with FBs who are ticking time bombs, blaming everybody but themselves and ready to explode with little or no provocation.
This really concerns me. There are reports in my area (Bubble Epicenter - L.A. County) of escalating burglaries and other violent crimes, and I cannot help but think it may be related to growing FB desperation.
That’s not the FB’s yet, that’s the construction workers and Home Depot parking lot guys. My understanding is that with the enforcement effort being picked up and the unemployent factors. Folks are getting a little restless. ICE has tripled their production this year. Causing a lot of problems on Terminal Island.
Harm,
We’re getting it in Sacramento too. The smart people sold and left the area before the crime escalated. The people who are left will resort to anything to keep the kids fed. We go through this every downturn. We’ve reached the 6th inning when we get our first major economically driven riot, along the lines of RKR.
Just finished Pynchon’s Mason Dixon. Maybe it’s time to reread a geek classic like Thieve’s World. Steinbeck would be too cliche at this point.
Funny you should mention this. I just drove across the Tappan Zee Bridge (N of NYC) 1 hour ago and noticed a sign near the beginning of it saying, “Life Is Worth Living” and then some small print inviting readers to phone some counseling group.
The CAR is now saying it’ll be a two year downturn. Sweet!
Today at lunch in Mountain View, I over-heard somebody saying they wanted to sell their house now and buy again in 4 years. The other person with them agreed.
The number of short sales and foreclosures in Menlo Park (where I rent) are going up, and have started to move from East MP, and Fair Oaks into Flood Park and other ‘real’ MP neighborhoods.
When I first started looking at buying in February, NOTHING in the Belmont Hills was in my wife’s and my price range. Everything was over a million. Now we’re seeing stuff drop down into the 800s.
My Father-In-Law, who was keen on us buying, now talks about how I was right about the housing market turning around, and is urging us to be careful not to ‘catch a falling knife’.
The house right down the street from my rental (2500 a mo) has gone from 850k to 775, and still no signs of selling. Two more houses on the same block just came up for sale, with another one obviously getting rehabbed enough to sell.
God, I’m glad I found Patrick.net and HBB way back in February. I’m glad I didn’t let our Realtor do the ‘research’ for us on home prices. She was actually pretty good, and suggested when prices really WERE overpriced compared to other things on the market, but she still bought into the ever-appreciating housing myth. When I brought up median household incomes being 70k in a town with 800k median prices, she said “only people making 200k+ are buying, so houses cost that much.”
It’s obvious I’ve already saved at least 150k for having spent less than 10k in rent, so I’m stoked.
It has become apparent that the last person anyone would want to talk to about housing is a realtor. At this point in the game there must be a bunch of bridge-jumpers in that crowd - and nobody wants the Koolaid they’ve been drinking.
If nothing else, this housing bust should teach people not to trust salesmen to plan your financial future.
For about 10 years. Then everyone will be buying collectible iPuppies at 400% markup. They’re going to retire this model soon, you know!
“The CAR is now saying it’ll be a two year downturn. Sweet!”
I guess they are pretty much implicitly suggesting all the prospective CA buyers should sit on the sidelines for two years before buying?
“only people making 200k+ are buying, so houses cost that much.”
Wha-, wha-, what??
Did she follow that up with, “And if you don’t, (I pity you) there are many ‘affordability products’ and ’salary adjustment strategies’ out there that one of my favorite lenders can assist you with.”
I’ve noticed the same thing. Prime selling season is over, but seemed like more open houses in MP, PA, LA, MV this past weekend than in quite a while. Very quietly, I think we’re back at ‘04-’05 prices already. We’re just getting started. Inventory is rising, very slowly, but very surely.
“Desperate, he sold the home - appraised at $1.2 million - for about $300,000 less than it was worth. He is now suing to get his house back. ‘(I felt) like I wanted to kill somebody or jump off the bridge,’ said Minto, who just took a job at Radio Shack to help.”
Sucker!
hahahaha!
“…who just took a job at Radio Shack to help…”
I don’t understand…help what? He’s already lost the house…
Help pay his attorney fees .
I sold some Microsoft shares in 1989 for a lot less than they’re worth today. Ya think I should be suing to get them back?
What a dumb sucker!
Yeah, If I did something so idiotic at least I won’t get my story plastered in the local newspaper for everyone to see…
“By any standard, even after a year of decline, San Diego’s home prices are still out of whack. Look at the distance between our median income and the median price of a home.”
“To qualify for the Realtors’ median of $614,000, the borrower would need to make about $138,000, San Diego mortgage broker Greg Brooks said.”
“‘And that’s an absolute minimum, assuming that the borrowers had no other debt, had $61,000 for a down payment and could afford to spend 40 percent of their income on mortgage payments, which is the absolute maximum recommended,’ Brooks said.”
NO KIDDING GREG, AND I SAID THAT TO MANY REALTORS AND THEY JUST LAUGHED IT OFF AND SAID BUY NOW OR BE PRICED OUT.
DID NOT LISTENED AND WILL SAVE A BUNDLE. LOL!
That was a good article, surprise it was even printed. The comments afterwards by the esmith guy are classic. He still doesn’t get it.
“To qualify for the Realtors’ median of $614,000, the borrower would need to make about $138,000, San Diego mortgage broker Greg Brooks said.”
And that means a minimum of $138,000 for the 30 year mortgage. What if that job gets outsourced? I’m a capitalist and I love world competition but this means accepting a new paradigm. No one should take out a 30 year mortgage unless he can pay the house off right away if SHTF. For those who are in their 20s and think they must buy a house to be whole or because they are raising a family (or whatever other foolish reason - you can rent if you have a family) tough luc - I am 48, worth $850,000, and paid mortgage payments for 7 years through 1996 until I decided renting makes me no less a man. SAVE. We have to get off our rear ends, become better than the competition in India and China, and compete! Reality is a tough wrench. But you cannot just sit there and complain about it being tough. Compete or die.
“No one should take out a 30 year mortgage unless he can pay the house off right away if SHTF.”
Why, given the wider global economic picture - did so very many wait until this decade to tie themselves to houses and so much debt? Talk about a case of bad timing - and for such wide swaths of society too. Your plan’s the right one bill in MD.
We’ll act as if overpriced homes don’t exist, yeah that’s the ticket.
The quick fix for the (hyphenated-one)
“Leslie Appleton-Young, chief economist at the California Association of Realtors, expects things to be tough this year and next. Inventory is building, but Appleton-Young said this can be easily fixed. ‘Our industry can control this by not taking listings from unrealistic sellers.’”
What is the economic reasoning behind the idea that not taking listings from unrealistic sellers will help control the market? Does this mean that we should also conclude that retailers who stock their shelves with, say, overpriced toys will drive down prices and sales of toys in general?
I know most of us fiscally responsible folks here tend to support Ron Paul for president. Throw a few bucks his way and lets make some history today.
http://www.ronpaul2008.com
Believe it or not, I’m seeing Ron Paul posters in Davis of all places.
I’m able to believe that - because I’ve seen Ron Paul stickers in San Francisco!
[Of all places... ]
My suspicion is that about 60% of the (voting) population wants the same things. In that case a Constitution loving, dollar loving moderate who speaks from the heart is a pretty appealing choice.
Ron Paul has raised a staggering $3.8 million so far TODAY and is still going strong. Here’s the e-mail I got from his campaign a little while ago:
November 5, 2007
Is it possible to comprehend what we’ve done today? Earth-shattering, jaw-dropping… No matter which way you phrase it, Ron Paul is for real.
Over $3,800,000 raised.
More than 35,000 total donations.
1 message - and 1 candidate - unlike any other.
Can we keep our momentum going? The most successful fundraising day ever is John Kerry’s $5.7 million. And that was on the day he accepted the Democratic nomination.
Let’s do it: https://www.ronpaul2008.com/donate
Jonathan Bydlak
Fundraising Director
Ron Paul 2008
Who wants to go the HBB party on Saturday, November 17th at 6 PM at Chevy’s in Redwood City (2907 El Camino Real)?
Please RSVP here.
Wish I could but can never get my pet sitter less than three months in advance. But I hope you guys have a blast!
Love to but Saturdays are actually tough. If it were middle of the week…
Bubble, bubble, toil and trouble. Join our HBB meetup on the double.
We’re finalizing the arrangements for the first-ever HBB Tucson meetup. Look for a meeting time and date in the Bits Bucket this week. I’ll bring the “It’s Different Here” sign. You bring your presence and your stories.
Good luck! Let us know how it goes. The south bay blogger dinner was a lot of fun.
Got popcorn?
Neil
there are a substantial number of us who missed the south bay dinner - will there be another one?
J
There was a South Bay meeting? Where?! When!
I wanna go to the next one…
I’ll bring popcorn…
Next South Bay dinner in December. We need to let enough news go by between dinners.
Got popcorn?
Neil
Neil,
I’ve driven my 49 Dodge 2 ton farm truck down to Leucadia, CA…it’s parked a few blocks from Beacon’s…I use as a RV for the weekends in the winter. If, you have another get together in Redondo…I’ll be arriving via train & bus…I figure gasoline will be close to $4.00 a gallon in the very near future.
Got Oil?
Im impressed hwy50. Maybe all us San diego bloggers could meet up over by yer truck. Ben, you too.
“Desperate, he sold the home - appraised at $1.2 million - for about $300,000 less than it was worth. He is now suing to get his house back. ‘(I felt) like I wanted to kill somebody or jump off the bridge,’ said Minto, who just took a job at Radio Shack to help.”
I’m not sure if anyone should be helping individuals who publicly declare their desire to commit mirder
I don’t think I will go to Radio Shack for a while .
Apologies for using the California thread for NZ news, but by the time I wake up the bits bucket is overflowing.
From the department of “Can you believe this?”
“Government takes control of real estate industry”
http://www.nzherald.co.nz/section/8/story.cfm?c_id=8&objectid=10474292
In NZ, all problems are addressed by enlarging the nanny state!
Hey, California owns all threads!
(Some suspect a bad habit of hijacking every other threads by CA posters…)
I do wonder how the new NZ system will be paid for. If the transaction costs get too high…
Got popcorn?
Neil
By the way, Realt-Whores in Spaaaace!
(There is no way I could make this stuff up)
(Real) “Estate agent hopes to be first NZ woman in space”
http://www.nzherald.co.nz/metro/story.cfm?l_id=121&objectid=10474294
ROTFL
Now, will she be able to make the later payments on the space flight?
chuckle…
Note: I really hope that the boys in Mojave can shake off their previous… problem and get a private venture into space!
Got popcorn?
Neil
When I first went to New Zealand in 1981, it was the ultimate cradle to grave socialist country, and it just may be heading back that way…
The nanny state is alive and well in NZ, no doubt about that. The Prime Minister’s last appearance in the daily papers was to scold the public about fireworks and threaten to ban them next year because FOUR people hurt themselves a little bit last weekend. (Background: we blow stuff up on Guy Fawkes Day and the days leading up to 5 November. You can buy fireworks at the supermarket and make your own mayhem.)
But I’m very enthusiastic about more and bigger government in this particular case. Realtors have been regulated by… themselves… and you can probably guess the degree of integrity THAT process has had. In the current world, one’s conviction for fraud does not lead to disqualification as a realtor, or even a hearing. Though a complaint was filed against a flat-rate realty firm last year - claiming their ad campaign was libellous. (Saying ‘a flat fee of $8995 is a better deal’ is basically saying ‘the other guys charge too much’… and the other guys didn’t want to hear it. The complaint was rejected in the end, but that it was accepted in the first place is a troubling sign.)
I’m sorry that another tribunal will be created from scratch, when there are already too many. But the need is there, in my opinion.
A lot of Americans will be screaming for socialism in 5 years when they wake up and realize they have:
- no retirement
- no healthcare
- no savings
- no jobs
Face it, almost every other country has it way better than our middle class. Way better. Imagine gas at $10 per gallon. Won’t hurt the Europeans a whole lot. They have excellent, affordable public transportation. Oh yeah, they also have 6+ weeks paid vacation per year, excellent healthcare, comprehensive retirement, etc.
Give it 5 years. People will start to realize exactly how screwed they are. No surprise. Who do they think paid for these gazillionaires? Yep, we all did.
Thanks for playing “you got screwed”.
“‘We’ve been screaming price cuts for the last six months,’ said Robert Stankus
He be stanky.
Reasons for civil disobedience…
Late 18th Century France : Sans-culottes
Early 21st Century USA: Sans-cash advance
http://en.wikipedia.org/wiki/Sans-culottes
Sorry if this is a dupe, thought it would be fun in case not:
From Inman News
You know the housing market has changed when …
Guest Perspective: Some home sellers still living in the past
Monday, November 05, 2007
By Doug Buenz
With all of the bad news surrounding the California real estate market, you would think that most home sellers got the memo that things have changed. Apparently, there are still some sellers who think it is still 2005 and that none of these market changes affect them. Because I am “the giver,” I want to do my part to help some of these sellers realize that things have changed.
Here are some examples of how things have changed since that 2005 market:
Then: Sellers hoped for multiple offers on their homes.
Now: Sellers hope for multiple showings per month (i.e., more than one).
Then: Buyers wrote cute, heart-wrenching letters about how badly they want the house.
Now: Sellers write desperate, heart-wrenching letters to potential buyers hoping they buy the house.
Then: Listing agents put a “Coming Soon” sign rider on as soon as the sign went up.
Now: Listing agents put a “Price Reduced” sign rider on as soon as the sign goes up.
Then: Sellers informed buyers that they would look at all offers a week from Tuesday at 4 p.m.
Now: The lender informs the seller that their home will be sold a week from Tuesday at 4 p.m. on the courthouse steps.
Then: Smug Realtors would tell someone who works at Starbucks that they don’t make enough money to qualify to buy a home.
Now: Desperate Realtors working at Starbucks learn that they don’t make enough to refinance out of their option adjustable-rate mortgage.
Then: Sellers worried when their homes were on the market for more than five days.
Now: Sellers are relieved when their home sells after only five months on the market.
Then: Thirty-year-old homes with green shag carpeting and harvest gold appliances are “retro cool.”
Now: Thirty-year-old homes with green shag carpeting and harvest gold appliances are expired listings.
Then: Sellers wanted to interview three top-producing Realtors to list their home.
Now: Sellers have a hard time finding three top-producing Realtors.
Then: Homeowners used their homes like ATMs.
Now: Homeowners realize their home is overdrawn.
Then: Appraisers did drive-by appraisals, and didn’t even bother to go inside the houses since values were going up.
Now: Appraisers do drive-by appraisals and don’t bother going inside the houses because they want to avoid getting beat up by angry, unhappy sellers.
Then: Buyers bought houses “as is” with minimal or no inspections.
Now: Buyers order 27 inspections, including soil samples, air samples, written interviews with neighbors, deposition-style interrogation of sellers over the disclosures, satellite images (from multiple angles at different times of day), and a comprehensive inspection from that hyperactive guy on “Extreme Home Makeover.”
Then: Buyers had a minister or family priest bless the house after they closed.
Now: Sellers have a minister or family priest perform an exorcism on the house after it has sat on the market for eight months.
Doug Buenz is a real estate broker associate with Alain Pinel Realtors in Pleasanton, Calif. He can be reached via his Web site, 680Homes.com. Buenz maintains a real estate blog, The 680 Blog, which contains analysis, insights, opinions and commentary on the Pleasanton and Tri-Valley real estate market.
‘(I felt) like I wanted to kill somebody or jump off the bridge,’ said Minto, who just took a job at Radio Shack to help.”
Emotional instability.
I’m afraid we should expect to see a lot more of this kind of thing, as the housing market sinks, sinks, sinks. More and more homes will be lost to foreclosure. More families disrupted, marriages blown apart, families scattered.
Watch divorce rates skyrocket, strange behaviour start to manifest itself. We’ve already read articles about how the most recent mega-fire was caused by arson. (arson from ousted homeowners?) Also, there have been accounts of vandalism from people who lost their homes, and go back and destroy their house.
It’s gonna get way worse, methinks.
If you own a house in big-city USA, you’ll pretty much be a forced contestant in terms of watching this country lose it’s mind, before your very eyes…
If you are a renter, you still have time to get away to small-town USA, where people don’t seem nearly as nutso.
I wouldn’t want to be anywhere near a big-city, as this thing unfolds~
Sounds like the new owner of that home better watch his back.
“Leslie Appleton-Young, chief economist at the California Association of Realtors, expects things to be tough this year and next. Inventory is building, but Appleton-Young said this can be easily fixed. ‘Our industry can control this by not taking listings from unrealistic sellers.’”
“So what’s coming? ‘It’s a pretty difficult environment now to come up with a forecast that’s right on,’ Appleton-Young said.”
Come on shill you canpump a little better now.
The Plan is for the agents to hide the inventory problem by not listing over priced houses. Less inventory = remove the fear of more depressed sales in 2008.
The plan was born from an idiot real estate broker. He does not realize if agents refused to list houses that the seller will find alternative ways to sell his house. The words “for sale by owner” is the nightmare of every real estate broker, there is no way that an agent can risk their stranglehold on the real estate market. They will list every house that a seller wants to sell, and continue to promise fountains of gold for the smart buyers.
The whetherperson (hyphenated-one) expects a 80% chance of clouds, and a 20% chance of crying…
“So what’s coming? ‘It’s a pretty difficult environment now to come up with a forecast that’s right on,’ Appleton-Young said.”
“Maybe. But here’s mine. Our future, residential real estate wise, is cloudy with a chance for tears.”
That’s the advice of Greg Berkemer, executive VP of the California Desert Association of Realtors….The bottom is not a pinpoint on a graph. It is more like a wide bumpy trough.
no, mr. desert realtor.. I’ll illustrate the bottom in terms you can understand..
Imagine driving 50 miles into the desert.. Can you visualize the parched, hot, flat barren plane stretching endlessly in all directions, peppered with nothing more than the bleached bones of the dead?
26 Millions for 3 acres in Hyderabad city, India.
8.3 Mil/acre.
http://www.eenadu.net/images/5pan1a.jpg
That is Rupees right? That comes to about $200K per acre. Seems OK for “Cyber” city’s Los Gatos.
No my friend its US $$$$$ 26 Million.
Rupees 10,500,000,000 or 105 Crores.
Awesome water front view aint it?
圣洁胡扯
“Desperate, he sold the home - appraised at $1.2 million - for about $300,000 less than it was worth.”
Or was the appraisal inflated by $300,000 above what the home was worth?
“He is now suing to get his house back. ‘(I felt) like I wanted to kill somebody or jump off the bridge,’ said Minto, who just took a job at Radio Shack to help.”
Let me guess: He just started a position as one of their corporate officers? Because you pretty much need an executive salary to afford a $1.2 m home.
——————The Plan —————————
“Leslie Appleton-Young, chief economist at the California Association of Realtors, expects things to be tough this year and next. Inventory is building, but Appleton-Young said this can be easily fixed. ‘Our industry can control this by not taking listings from unrealistic sellers.’”
What they want is to fog the fact of huge inventory. If we can get 70% of the sellers to take their houses off the market then the fear of too much inventory will dissapate and the buyers will get off their fence and snap up what appears to be the small number of houses that are available. In other words, hide the facts and we can continue to dupe and deceive the the home buyers.
——————The Plan fails —————————
What would happen if real estate agents turned away house sellers. The sellers would stick up For Sale by Owner signs and people will learn the selling agents are nothing but blood sucking leeches that the world does not need.
“Ian Minto isn’t exactly homeless, but he sure doesn’t have his home. The former banker lost his job and, last fall, began falling behind on mortgage payments on the Mill Valley house he grew up in. He tried to refinance but said the lender that held the second mortgage refused to sell the note. Despite having plenty of equity, he was unable to restructure his payments, which forced him to default on his loans. Foreclosure proceedings began.”
“Desperate, he sold the home - appraised at $1.2 million - for about $300,000 less than it was worth. He is now suing to get his house back.”
Can someone tell me what excuse is he using for the law suit?
You wanna know what’s *really* sad, he probably claimed $300k of “instant equity” in his listing. Now he wants to sue over the instant equity.
I personally don’t know how he can get away with suing the new owner, who didn’t do anything wrong other than purchase something he offered for sale. He probably wants to harass the new owner and hope for some money from him to go away. I think in CA these nuisance suits can land you in a lot of trouble.
That it is HIS HOUSE! lol… I have no clue. But the irony of the story was that it was a banker that got screwed by a bank. Serves him right.
Excuse for law suit is that lenders were being bad faith in not restructering his loan ,or the second TD holder in bad faith caused him to not be able to get a new first TD (must of been a clause in the 2TD whereby the lender could do it ).
If the second TD holder had his eyes on the property(maybe it had alot of equity ) and the second TD holder refused to let him get a new first TD (which I don’t know if he would qualify ),than that might be his point . There are cases in which a lender actually wants a property.
When my company made hard money loans in the early 80’s (after Voelker) I told my investors NOT to invest in any td on any property in which they did not want to own! It’s just as true today.
He could have neatly avoided this whole mess had he paid his mortgage as he agreed to. Sorry, no sympathy.
Not surprised re the legal issue. I sold a house many years ago, 4 years later the buyers contacted me said there was some lead paint in the basement area, wanted me to pay them damages. Turns out they were selling the house, an inspection turned up the paint. I told them it was news to me but it was their house after all, good luck. They went the law suit route (I haven’t a clue why they did), got absolutely NOWHERE.
An indirect way to assess the state of things at the high end. Was the 72M Rothko this summer the top tick in the art market? Will it eventually leave the loo of some private equity poodle and come back to a museum somewhere?
http://www.luxist.com/2007/11/05/is-the-art-market-about-to-take-a-dive/
Kitschy modern art depended upon kitschy modern finance and now both seem in peril…
If you don’t absolutely need to sell, please remove your listing and come back when you are in full blown panic mode.
LMAO
“Recognizing the bottom will be ‘more about hindsight than foresight. The bottom is not a pinpoint on a graph. It is more like a wide bumpy trough. It appears that is where we are right now,’ said Berkemer.”
Well, Berkemer, if you think that’s true, then get out there and buy! But if you think we’re close to a trough now, I think you have the graph upside-down.
If Berkemer is certain we are in a trough now, then I suggest he convince a banker of the same, and borrow enough money to buy ten investment houses before real estate starts going through the roof again.
“Maybe. But here’s mine. Our future, residential real estate wise, is cloudy with a chance for tears.”
This metaphor, while maudlin and melodramatic, is nonetheless an improvement over her old “souffle” cliche. Hey, that rhymes!
She might eating or cutting onions.
“The weak in courage is strong in cunning.”
William Blake
Nice saying !
I The FED cut rates and a friend had their job outsourced overseas.
I was feeling a bit depressed the other day, so I called the Suicide Help Hotline.
I was put through to a call center in Pakistan. I explained that I was feeling suicidal.
They were very excited at this news and wanted to know if I could drive a truck
or fly an airplane….
LOL. my first real chuckle of the day….
Buyers are so turned off you could put the house for free and they would still ask for you to pay the property taxes or no deal?
“So what’s coming? ‘It’s a pretty difficult environment now to come up with a forecast that’s right on,’ Appleton-Young said.”
“Maybe. But here’s mine. Our future, residential real estate wise, is cloudy with a chance for tears.”
————————————————————
*My Day-dream*
To: Leslie Appleton-Young
From: Cal. Assoc. Of Realtors
Subject: Your Fired!
Please have your desk cleared out by 5 pm.
Thanks for everything!
Governator: I agree Mr Vincent about what you wrote and such. I have given Ms Lesi Applegate Yang several warnings about her verbage and things. Its time for her to go. Your dreams and such will come true now. Please have your letter on my desk tomorrow for my signature, and this that and the other, and I will forward it Ms Applecart immediately.
Maybe she will resign. Maybe she will say, “I just can’t lie anymore!”
GOVERNATOR: Thank you Tom. I agree and such. I’ll be back…..but Ms Applebottom will not!
Someone shoot me. This is the state I live in and these are the people here
http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/110507dntsw.21d440e.html
Thought you moved to AZ?
…and they vote
The NAR should make him their spokesman then put Yun in the tub.
“Desperate, he sold the home - appraised at $1.2 million - for about $300,000 less than it was “WORTH”. He is now suing to get his house back.
I hope the judge quotes: “You keep using that word, i dont think it means what you think it means” Inigo Montoya; Princess Bride
J
“Recognizing the bottom will be ‘more about hindsight than foresight. The bottom is not a pinpoint on a graph. It is more like a wide bumpy trough. It appears that is where we are right now,’ said Berkemer.”
So much for hinsight.
From the “Not Meant to be Disclosed to the Idiot Public” Dept.:
“We always sold two-story houses,” Sands said of his days as a Realtor. “One story for the buyer and one for the seller.”
Thanks Fred. Nice of you to confirm that realtors have forked tongues. Hadn’t quite figured that one out yet.
“From the “Not Meant to be Disclosed to the Idiot Public” Dept.:
“We always sold two-story houses,” Sands said of his days as a Realtor. “One story for the buyer and one for the seller.”
Thanks Fred. Nice of you to confirm that realtors have forked tongues. Hadn’t quite figured that one out yet.”
Bwhahahahaha
Now that has to be one of the HBB classics
“We always sold two-story houses,” Sands said of his days as a Realtor. “One story for the buyer and one for the seller.”
I get that. Two “stories”, one lie for the buyer and another lie for the seller.
What I don’t understand is how the rest of the world’s housing market keeps going. So many markets, e.g. England, Ireland, Australia, New Zealand, many countries in Europe, Canada, etc. are based on over-leveraged buyers, strange loans, people buying investment properties at inflated prices. How do they keep going and going and going?
Eveready Energizer Bunny?
well.. it’s different there, of course.
I’m not a shrink, but maybe its a guy thing?
I guess it’s because their socialistic governments just keep paying and paying and paying. So when they crash (and they will), there will be no talk of a government bailout because the government itself will be in need of bailing.
What I find funny is that many news outlets such as the BBC, Telegraph and The Guardian among others point their fingers at the subprime mess here in States and laugh. Soon to their surprise the poison will appear right in their backyard!
Cinch
This is an interesting article…
http://www.latimes.com/news/nationworld/nation/la-na-exurb6nov06,0,2786253.story?page=2&coll=la-home-center
So is this one…where has all the money gone?
http://www.latimes.com/news/local/la-me-budget6nov06,0,2564006.story?coll=la-home-local
Sen. Darrell Steinberg (D-Sacramento), who sits on the Senate Budget Committee, called on the governor to consider reining in not just spending, but also tax breaks for businesses.
yeah.. a jobless Californutopia will want to pressure those evil business capitalists. If what little remains won’t leave voluntarily, tax them out.
Comment by joeyinCalif
2007-11-05 23:12:54
Sen. Darrell Steinberg (D-Sacramento), who sits on the Senate Budget Committee, called on the governor to consider reining in not just spending, but also tax breaks for businesses.
yeah.. a jobless Californutopia will want to pressure those evil business capitalists. If what little remains won’t leave voluntarily, tax them out.
______________________________________________________________
Yeah, ’cause all those tasty tax breaks have sure encouraged them to employ more . . . illegal aliens.
It funny, I can, if I wanted to, with a few phone calls and some legal work, move my CA business (me + three associates, only one of whom is in California) to some other state, and be 100% legal. It’s just a matter of renting space in FL (where about 1/3 of my business is anyway) instead of CA.
(One reason I don’t do this is the savings won’t be all that great, until I find a way to–within the law, of course–move my primary residence out of CA and beat CA personal income tax. Right now I spend the majority of my time in CA. Someone who isn’t as honest as I am may realize he can rent a tenement slum in Florida for a fraction of what he pays in CA income taxes, and not actually have to live in FL, as long as he can prove he does.)
Of course *I* wouldn’t do this, because I am honest (really!). But if they push folks a little too much, anyone with any means will do this.
Hi, all. Long time lurker, first time poster. I just got laid off from Countrywide in Orange County - I was one of the “little people”, not a loan officer. When I started working in the mortgage industry, the company I worked for had high standards. I hardly ever saw an Option ARM loan. Unfortunately, when I went to Countrywide (for “job security” I thought), I found out some very sad truths! I have been appalled by what I have seen over the past 2 years. I am actually glad to be out of that place! But here I am… out of work. Sigh.
chickn little in the OC
Sorry to hear about your job loss.
It is always very interesting to read a first person account
of difficult situations as yours. (Almost like reading
a first person account of a war)
Can you relate as to the general mood/outlook of your peers?
Do you “do lunch” with others in the business? What
are they telling you?
I live in Irvine (home to many R/E related organizations)
I am in no way involved in the R/E, financial worlds but
any general, non-proprietary information that you care to
pass on I think would be of high interest to readers of the HBB.